InGovern raises governance issues at Finolex Cables

September 22, 2021 12:57 AM

Finolex has convened its annual general meeting (AGM) for September 29, while the e-voting on the proposals will commence on September 26 and end on September 28.

The proxy advisory firm has asked shareholders to vote against the appointment of directors Padmanabh R Barpande, Avinash S Khare, Firoza F Kapadia, Prasad M Deshpande and Sunil Upmanyu. (Representative image)

By Rajesh Kurup

Proxy advisory firm InGovern Research Services has raised governance issues at Finolex Cables, stating that its board composition may be in violation of existing rules.

According to the proxy advisory firm, all directors — including executive chairman DK Chhabria – should be liable for retirement by rotation.

“Chhabria should be a director who is liable to retire by rotation as the other directors are either independent directors or additional directors. Further, Chhabria is liable to retire by rotation also because he is a director who is longest in office,” it alleged.

The company had earlier appointed Chhabria as a permanent director for life, it said, adding this is in violation of the provisions of Companies Act.

There is a dispute between the major corporate shareholders – Orbit Electricals holding 30.7% and Finolex Industries holding 14.5% — on stakeholding in the company, which is preventing Finolex Cables from getting the right set of directors.

Both the shareholders are under the management control of Prakash Chhabria, one of the promoters of the company against whom DK Chhabria has raised certain disputes earlier.

The firm has also asked shareholders to vote against the appointment of directors, alleging that the current board composition may be in violation of the Companies Act 2013, Sebi listing regulations and corporate governance norms.

As per the current practice, companies appoint independent directors as additional directors, subject to shareholders’ approval at its next general meeting. On its part, Finolex Cables appoints additional directors immediately after the AGM and doesn’t call for shareholder approval through postal ballot or EGM for almost a year till the next AGM, which results in additional directors being on the board for a year without shareholders’ approval, InGovern alleged.

The proxy advisory firm has asked shareholders to vote against the appointment of directors Padmanabh R Barpande, Avinash S Khare, Firoza F Kapadia, Prasad M Deshpande and Sunil Upmanyu.

The proxy advisory firm also sought to reject the resolutions to appoint Padmanabh R Barpande, Avinash S Khare, Firoza F Kapadia as independent directors of the company.

These resolutions are against good governance as independent directors are not liable for rotation, and also against minority shareholders’ interest. In its view, the company needs a fresh set of directors and non-independent directors who are made liable to retire by rotation.

Finolex has convened its annual general meeting (AGM) for September 29, while the e-voting on the proposals will commence on September 26 and end on September 28.

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